Build and Bet

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Recently I found myself at dinner with one of the founders of the Review, and the discussion veered among other things, to the first principles of worldviews. Determinism and probabilistic thinking became the oppositional frames of our debate, and much inquiry ensued over a distractingly tasty sequence of appetizers (great food is a grounding friend in times of abstract intellectual upheaval).

The dinner host made a compelling case for determinism, and I found myself searching for a counterbalance in my well-trained affinity for probabilistic thinking (note- it is my affinity that is well trained, not the probabilistic thinking per se). Any quarter of statistics at Stanford is potent enough to convert a vulnerable student, for the thinking is elegant and the applications direct. How do we vindicate anything we spend our energies on at Stanford? Returns, I hear you cry, returns on my investment! How do we decide between potential opportunities, to bring order to the chaos of decision-making? Expected values of course, you declare, sum up my weighted preferences, build a rank order, and derive the maximum! Somewhere in a Princetonian heaven, Von Neumann smiles with pride. How do you make a call on which startup to join, company to found, customers to charge? Continuous games, you say impatiently, with complete contingent strategies! Nash has now joined your list of admirers.

A couple of thought-provoking hours and one long reflective shower later, the true implications of our training emerged, albeit in a rudimentary and reductionist fashion. Probabilistic thinking is friendly to the risk averse. Mediocrity is bred by risk aversion. Hence, probabilistic thinking breeds mediocrity. In contrast, successful determinism is contingent on the realization of finite state outcomes. We cannot possibly predict all our possible state outcomes. Hence, successful determinism cannot exist. At this point my reader, well versed in the doctrines of critical inquiry, is on to me. Foul fallacy, you admonish, for successful determinism is very well possible, just harder to achieve. It may require the forceful follow up of an agent, the tireless and risky work required to force a subset of expected outcomes as functions of your actions, but nay, nowhere is impossibility implied by the failure to back out all your future possible outcomes.

And thus we chance upon the underpinnings of our zeitgeist, the culture of risk and low costs of failure that our times have come to be synonymous with. The catchphrases are ubiquitous. Fail fast. Think big. Here’s to the crazy ones. The determinists. Down with the arbitrageurs. Occupy! It is a battle played out in lecture halls, in Presidential debates and in tomes churned out by bloggers, investors, entrepreneurs and anybody else with an opinion on the economy. Build things, don’t bet on them. Be a Builder, not a Better. A Builder doesn’t gamble, she believes. Betting is easy. Ban the proprietary trading; value is made from products, not by shaving time off trades. The popular press does a great job of building polarity between these two schools, but I will refrain from dedicating the remainder of this post to that muddled and confusing, but fascinating, branding battle.

Instead, I point you to my takeaway- be aware of this intellectual enterprise. At Stanford, we have the luxury of learning one way of thinking and acting out another. We can analyze with decision trees, but the outcomes we decide to believe in are ours alone to make. Ultimately, Probabilism and Determinism are necessary tools in the metaphorical belt that we set out to diligently string together as Stanford freshmen. And so you ask me, are you a probabilistic thinker or determinist? In return, I thank you for asking the question, and go on my way. It really doesn’t matter what I think, as long as you choose, right?